Lincoln General Insurance v. U.S. Auto Insurance Services, Inc.
2012 U.S. Dist. LEXIS 124260
| N.D. Tex. | 2012Background
- Lincoln General sues U.S. Auto and affiliates alleging miscalculation and underpayment of premiums under GAAs and Reinsurance Agreements; premiums were held in trust and U.S. Auto could withhold commissions and a Contingency Commission; IBNR estimation affected commissions and the Premium Trust Account and ZBA were involved in claims payments; U.S. Auto transferred its reinsurance business to Santa Fe and allegedly stopped paying Lincoln General; Lincoln General previously settled a related 2007 case and now asserts multiple claims including fiduciary duties, conversion, tortious interference, and breach of contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of fiduciary duty from U.S. Auto to Lincoln General | Lincoln General asserts GAAs/RA create fiduciary duties | U.S. Auto did not owe a general fiduciary duty to Lincoln General | No fiduciary relationship found; fiduciary duty not established |
| Fiduciary duty by Doug Maxwell to Lincoln General | Maxwell as MG A owed fiduciary duties under statute/contract | No fiduciary duty; Maxwell acted independently | No fiduciary duty found; Maxwell not liable |
| Conversion and economic loss rule applicability | Conversion claims arise from extra-contractual duties | Claims fall under contract; economic loss rule bars them | Conversion claims barred by economic loss rule; contract governs damages |
| Breach of contract viability given ambiguity in IBNR/Section 4.01 | U.S. Auto breached by removing IBNR; Section 4.01 ambiguous | Removal of IBNR permissible post-termination; ambiguity exists in contract | Breach of contract claim denied due to ambiguity; no unambiguous obligation established |
Key Cases Cited
- Navigant Consulting, Inc. v. Wilkinson, 508 F.3d 277 (5th Cir. 2007) (elements of fiduciary duty)
- Willis v. Donnelly, 199 S.W.3d 262 (Tex.2006) (informal fiduciary duty arises from trust and confidence)
- Meyer v. Cathey, 167 S.W.3d 327 (Tex.2005) (close personal relationship creates fiduciary duty)
- Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171 (Tex.1997) (courts do not create fiduciary relationships lightly)
- Howard v. Burlington Ins. Co., 347 S.W.3d 783 (Tex.App.-Dallas 2011) (presumption of agency not created without proof of control)
- Exxon Mobil Corp. v. Kinder Morgan Operating L.P., 192 S.W.3d 120 (Tex.App.-Hou. 2006) (economic loss rule broad interpretation; contract governs)
- DeWitt County Elec. Co-op., Inc. v. Parks, 1 S.W.3d 96 (Tex.1999) (ambiguous contract interpretation governs when contract is unclear)